A study conducted on behalf of the Employee-Owned S Corporations of America (ESCA) by Rutgers University Institute for the Study of Employee Ownership and Profit Sharing found that multinational ESOP (Employee Stock Ownership Plan) -owned companies appear to derive competitive advantages in international markets from being employee-owned. Executives reported numerous benefits, including enhanced recruitment and retention; employee productivity and financial security; corporate reputation; and customer loyalty. It underscores the “halo effect” of employee ownership for international employees of U.S.-based ESOP companies – the foreign workers of these companies are able to experience similar benefits from the ESOP model as their U.S. counterparts. Even in cases where foreign workers for ESOP companies do not have an ownership stake (due to legal, regulatory or cultural barriers), executives have found ways to ensure they can benefit financially from company success—for example through profit-sharing or grants of synthetic equity.
The Rutgers study drew on interviews with multinational S Corporation ESOP companies, including ESCA members Amsted Industries, Black & Veatch, Burns & McDonnell, Schweitzer Engineering Laboratories, and Taylor Guitars. Stephen Smith, Chairman, President and CEO of Amsted Industries told Rutgers, “We do not have a retention issue for our leadership in any country.… You can tell that people are just proud to be a part of us. It’s not only the pay, but it’s that we integrate them into the company too.”
“The efforts and success of these multinational private, ESOP-owned companies demonstrates that these companies are as invested in the wellbeing and growth of all of their employees, and this has economic and cultural impact beyond U.S. operations” says ESCA President & CEO, Stephanie Silverman. “And each company finds a way to protect, adapt or expand that investment that in turn supports a secure ecosystem of trust, loyalty and growth.”
With the employee ownership movement growing, and ESOPs increasingly seen as a major tool for strengthening business and driving growth that has bipartisan appeal, the Rutgers study’s analysis and case studies offer new insights and models for today’s globalizing economy.